What are your financial goals? Will a loan help you reach them faster?. For example, loans can grow your business, get you through in a pinch, or help you buy assets, such as a vehicle.
Even though loans are a great way to boost your finances, you need to consider the cost of interest payments and the amount of responsibility that comes with taking out a loan.
If you’re worried about interest, or the mental burden that comes with owing money, you should know that there are simple yet effective ways to repay your loan faster. Keep reading to learn how you can get peace of mind knowing that your goals are being met without any of the negative consequences.
What Type of Loans Can You Get?
There are several different types of loans you can get depending on your goals and history.
A payday loan is a short-term loan lent against your current pay stubs. This type of loan allows you to access cash quickly and help you cover expenses until you receive your next paycheck.
A personal loan can help you finance anything you need.
There are three types of personal loans:
- An unsecured term loan is a smaller loan that isn’t tied to anything you own
- A secured term loan is secured to something you own, allowing you to borrow more significant amounts
- A line of credit (LOC) is a preset borrowing limit that can be tapped into at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again.
A business loan can help you grow your business by allowing you to invest in your staff, products, services, or equipment.
There are three types of business loans:
- A secured business loan is tied to a business asset and best used for large business purchases
- An unsecured business loan is not tied to a business asset and is best for small, planned expenses
- Short-term cash flow loans give a business access to quick cash whenever it’s needed most
The Benefits of Paying Back Your Loan Quickly
There are many benefits of repaying your loan early, including:
- Saving money by decreasing the amount of interest you pay
- Freeing up more money long-term
- Increasing your debt-to-income ratio
- Easing the stress you may feel knowing you owe money
- Boosting and improving your credit score
- The reward of paying your loan back earlier than expected
Before deciding to pay your loans back quickly, always double-check with your lender that they don’t have any penalties for making extra or early payments. At Blue Copper Capital, you can absolutely pay off your loans early. In fact, we include amortization schedules with your loan documents to make it easier.
5 Ways to Repay Your Loan Faster
There are many benefits to repaying your loans early. It can reduce the amount of interest you pay over the term of your loan, free up more money long term, and ease some of the stress you may feel knowing you owe money.
These tips can help you become debt-free faster!
Round-Up Your Monthly Payments
A simple way to shorten your loan is to round up your monthly payments. You can choose what value you round up to, but we suggest rounding to the nearest $50. With such a slight difference, it likely won’t make a dent in your monthly budget but can save you time and interest in the long run.
Make Bi-Weekly Payments
Most loans require monthly payments. To pay off your loan faster, you can make half-payments every two weeks. With more frequent payments, less interest will accrue, and you can shorten the life of your loan or extra payments.
Make One Extra Payment Each Year
If bi-weekly payments seem like too much for you, you can accomplish the same goal by making just one extra payment a year. You can do this in one lump-sum amount or spread it over the year.
Another great way to pay off your loan early is to refinance, but only if the circumstances are right. For example, refinancing is an excellent option if interest rates have dropped or your credit has improved significantly.
Boost Your Income and Put All Extra Money Toward the Loan
If you want to pay off your loans faster but don’t have the extra money to be able to employ any of the above tactics, there are many ways to boost your income.
From creating a tighter budget to selling things you don’t need, you can make extra space in your bank account to put towards payments on your loan.
Reach Your Financial Goals With a Loan
At Blue Copper Capital, we’re here to help every one of our clients meet the financial objectives they’ve set for themselves.
It’s always beneficial to speak to your lender to discuss your payment goals and how you can achieve them.
If you have a loan and are interested in paying them off early, contact us today.